Japanese central bank further eases monetary policy, holds key rate steady

08:26, March 18, 2010      

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The Bank of Japan (BOJ) decided Wednesday to keep its key interest rate unchanged at 0.1 percent as widely expected and to further ease monetary policy to fight deflation.

The central bank last cut its target rate for unsecured overnight call money in December 2008 from 0.3 percent to cope with the global financial crisis.

The central bank also decided to double to 20 trillion yen (220 billion U.S. dollars) the funds available to banks for the three- month loan program to fight deflation and ensure an economic recovery.

"We believe the step should contribute to ensuring the improvement in the economy and prices," BOJ Governor Masaaki Shirakawa told a press conference after concluding a two-day policy meeting.

He added that the additional monetary easing is also aimed at helping lower longer-term interest rates and propping up domestic demand, and that the BOJ will continue to make contribution to supporting the economy through measures it can take.

Japanese government welcomes the move, saying the easing measures is consistent with expectations to fight deflation.

The BOJ stayed firm on its assessment of the nation's economy, saying the world's second largest economy is "picking up."

"Japan's economy is picking up mainly due to various policy measures taken at home and abroad, although there is not yet sufficient momentum to support a self-sustaining recovery in domestic private demand", and the bank "will continue to aim to maintain the extremely accommodative environment", it said in a statement.

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